Wildfires, Global Climate Change, And The Policy Environment

Wildfires, Global Climate Change, And The Policy Environment

California is suffering from raging wildfires that, as of September 10th, have burned over 3.1 million acres, caused 12 fatalities, and destroyed over 3,900 structures. Residents are also enduring rolling electricity blackouts and unaffordable energy, yet California’s greenhouse gas emissions are now rising while the long-term national decline in emissions continues unabated.

Connecting all of these disconcerting trends are California’s policies.

The intention of the California approach is to improve the environment and create a low-cost, low-emission energy infrastructure for the state. In practice, these policies either create avoidable problems (e.g. rolling blackouts) or fail to meet their basic responsibilities (e.g. efficiently manage the forests to avoid uncontrolled wildfires).

Starting with the wildfires, Michael Shellenberger provides an important perspective in his August 24th Forbes piece. As he notes, “climate change is occurring and playing a role in warmer temperatures and heatwaves”. But, this does not mean that climate change is the driving factor of this year’s wildfires. Instead, as Shellenberger documents, poor forest management practices are the driving factors.

A 2018 report by the Little Hoover Commission (LHC) confirms Shellenberger’s analysis. According to the LHC, “California’s forests suffer from neglect and mismanagement, resulting in overcrowding that leaves them susceptible to disease, insects, and wildfire.” This year’s wildfires are the tragic result of this neglect and mismanagement.

Out of control wildfires can be contained with better forest management techniques. Toward this end, the LHC report called “upon the state to use more prescribed fire to reinvigorate forests, inhibit firestorms, and help protect air and water quality. Central to these efforts must be a statewide public education campaign to help Californians understand why healthy forests matter to them, and elicit buy-in for the much-needed forest treatments.”

While the wildfires are dominating the headlines, for obvious reasons, California’s climate policies are also worsening the state’s environmental stewardship and decreasing economic opportunity.

One of the major purposes of California’s climate policies is to reduce greenhouse gas emissions. In isolation, the policies seem to be successful. California’s carbon-dioxide emissions in 2017 (the latest data available) were 8.7% lower compared to the peak in carbon-dioxide emission in 2007. Putting this decline in perspective tells a different story. Over the same time period that California’s carbon-dioxide emissions declined by 8.7%, emissions in the rest of the country declined by a much larger 14.9%.

Worse, California’s decline in emissions have stagnated since 2011 even though nationally carbon-dioxide emissions have continued their downward trend. The timing of the state’s declining progress is not coincidental. Beginning in January 2012, California shut down the San Onofre Nuclear Generating Station. Consequently, California’s climate policies have been simply replacing a reliable low-emission technology (e.g. nuclear energy) with less reliable low-emission technologies (e.g. solar and wind).

From an emissions perspective, trading one low-emissions source for another is a wash, but from a social welfare perspective, the impacts on the residents of California has been troubling.

Heatwaves hit California. While global climate change is linked to making these heatwaves more intense, the confluence of the state’s policies is making these events more difficult for millions of families, both directly and indirectly.

Directly, California’s energy grid is now overly reliant on less reliable solar and wind energy sources that the Energy Information Administration (EIA) categorizes as non-dispatchable sources of electricity. By definition of being non-dispatchable, wind and solar electricity sources cannot automatically increase their energy output in response to surges in demand, such as the increased need for electricity in response to the heatwave.

Instead, solar power generates electricity when the sun shines, and wind power generates electricity when the wind blows. When coupled with the inadequate battery storage technologies, California’s power system is now unable to increase the supply of electricity to match surges in demand. Spikes in demand in response to heatwaves consequently cause rolling blackouts that still threaten the world’s fifth largest economy.

Indirectly, California’s energy policies mandate that energy providers invest their scarce resources into the politicians’ favored projects, which prevents companies from funding other, arguably higher-valued, investments. These investment resources should have been devoted toward improving the energy infrastructure, which would have helped alleviate the current energy shortages. Another high-valued investment opportunity lost would have supported better vegetation management programs and fire mitigation technologies that would help better manage the risks of sparking wildfires. The loss of these investments has, consequently, worsened the problems of rolling blackouts and wildfires.

As if these problems were not enough, these ineffective policies also cause Californians to pay a premium for their electricity. According to the EIA, retail electricity prices are 57% more expensive in California compared to the U.S. average. Prices for regular gasoline, according to AAA, are 47% more expensive. California’s high prices contributes to the affordability problem that plagues the state and helps explain why California, the home of Silicon Valley and a global financial hub, also has the highest poverty rate of any state in the country.

Nobel laureate in economics Milton Friedman counseled that policies should be evaluated based on their results not their intentions. Judged against this criterion, California’s climate change policies are failing. The policies are failing to efficiently manage the risks for wildfires, failing to reduce emissions faster than the nation overall, and causing unaffordable energy and rolling power blackouts. These outcomes are not inevitable. However, they will be if the state’s leaders do not learn the right lessons from today’s difficulties.

I am a Senior Fellow in Business and Economics at the Pacific Research Institute and the Director of PRI’s Center for Medical Economics and Innovation. My research explores the connection between macroeconomic policies and economic outcomes, with a focus on the health care and energy industries. I have over 25 years of experience advising Fortune 500 companies, medium and small businesses, and trade associations. I received my Ph.D. in economics from George Mason University.

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.